Use our Provident Fund Tax Calculator to estimate the tax payable on lump sum payments from your provident fund. Please note that this is only an estimate and does not include employer/employee contributions or taxable deductions.

Calculation of Tax payable on the lump sum or annuity payments of Provident funds can be a very tricky business. This is because special tax rates are used according to slabs identified by the South African government. And what’s more, is that these tax rates may get revised every tax year!

In this article, we’ll see simple steps to calculate lump sum or provident tax.

How To Use An Online Provident Fund Tax Calculator?

Using an online calculator is super easy. However, you would need an active internet connection and a device such as a smartphone or a laptop. Follow the below-mentioned steps to get started!

1

First of all, shoot up your browser and search “Provident Fund Tax Calculator”. You may use any browser for this purpose including Chrome, Opera, Edge, Firefox, and Internet Explorer.

2

When the tools page opens up, you will be required to select the relevant Tax year and then add the total pre-tax lump sum amount of the provident fund. Click on the option saying calculate to get the calculation started.

3

In only a matter of seconds, the tool would calculate the approximate tax payable amount. You would be separately displayed the total amount of tax that you would be required to pay or if the tax is payable or exempt.

For a more comprehensive understanding of your total tax obligations, you might also want to check out our Provisional Tax Calculator and Medical Aid Tax Calculator.

Provident Fund Tax Calculation

Things get a little complicated when it comes to actually calculating the tax payable on provident fund payments. A receiver may use an online tool to get a rough estimated tax figure however, the with older can not do so. So, a tax specialist is usually hired.

What a tax specialist does is he/she creates a complete working of provident fund calculation. In the working, employer and employee contributions are added and allowable deductions are deducted. In the resulting figure, tax rates are applied according to the applicable tax slab as stated down below.

Taxable Income (R)

Tax Rate

1 – 550,000

0% of taxable income

550,001 – 770,000

18% of taxable income above 550 000

770,001 – 1,155,000

39 600 + 27% of taxable income above 770 000

1,155,001 and above

143 550 + 36% of taxable income above 1 155 000

FAQs

Yes, a provident fund online tax calculator is indeed a very useful tool however, it does not give an accurate tax figure. Hence, it is not a reliable tax calculation source on a professional level. Being an employer, you need to calculate an accurate and reliable tax figure that needs to be paid to the authorities on behalf of the employee.

So, I would say that the provident fund tax calculator is indeed a very useful tool for calculating a rough estimate of the tax payable on your lump sum payment. The resulting figure is not very accurate and the actual figure might be different than the calculated one but still, it gives a good estimate.

However, an employer is supposed to withhold the tax from provident fund payment before handing out the payment to the employee hence, they need an accurate figure of tax deduction. A tax specialist is hired in this case who calculates the tax-deductible by making a proper calculation using his knowledge of tax laws and expertise.